On September 13, the Biden-Harris Administration published a fact sheet regarding its intended plans for tackling the exponential increase of shipments claiming the de minimis exemption and calls upon Congress to complement those plans with legislation. The de minimis exemption for imports, which allows for packages of goods costing $800 or less to enter the U.S. with limited documentation and free from duties and taxes, has been a flashpoint in Congress as the volume of packages entering the country under the exemption has increased by an order of magnitude over the last decade. With nearly a billion de minimis packages entering the country this year already, Congress – and now the Biden-Harris Administration – has been seeking a way to allow Customs and Border Protection (“CBP”) to effectively handle the increase in the volume of shipments while ensuring the U.S. trade laws, health and safety laws, and consumer protection laws are enforced. The proposed changes to de minimis are animated by concerns over by the explosion of sales by Chinese e-commerce giants, especially those in the apparel space, as well as concerns about illicit content, including fentanyl and precursor chemicals, products dangerous to the health and safety of U.S. consumers, as well as goods made with forced labor.

Against this background, the Administration announced its intent to issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, positioning such products alongside products subject to antidumping or countervailing duty orders which are already ineligible to benefit from the exemption. Approximately 40% of U.S. imports – including 70% of textile and apparel imports from China – are covered by Section 301 tariffs. The Administrative also intends to issue a Notice of Proposed Rulemaking requiring additional data for de minimis shipments, including the 10-digit tariff classification number and the entity on whose behalf the exemption is being claimed, allowing CBP much greater insight into the contents of the package and the purpose for importation.

The White House also announced that the Consumer Product Safety Commission (CPSC) intends to propose a final rule requiring importers of consumer products to file Certification of Compliance with CBP and CPSC at the time of entry for all shipments, including de minimis shipments.

In addition to announcing this intended rulemaking, the Administration also called for Congress to enact legislation by the end of the year, which would exclude import-sensitive products and products subject to Section 301, 201, and Sections 232 tariffs, especially textile and apparel products, from de minimis eligibility. The White House explicitly endorsed the proposed de minimis reforms set forth in the Detect and Defeat Counter-Fentanyl Proposal. This Proposal, set forth by the Administration on July 31 of this year, is intended to incorporate bipartisan ideas already put forward by members of Congress, namely establishing a nation-wide pill press and tableting machine registry and permanently regulating fentanyl-related substances as “Schedule I” drugs subject to heightened penalties for distribution and possession, as well as expanding CBP’s authority to demand additional documentation regarding de minimis packages.

The call for legislation regarding de minimis comes approximately one month after the Fighting Illicit Goods, Helping Trustworthy Importers, and Netting Gains (FIGHTING) for America Act was introduced senators Ron Wyden, Cynthia Lummis, Sherrod Brown, Susan Collins, and Bob Casey. The legislative priorities endorsed by the Administration closely follow those in the FIGHTING for America Act, including barring import-sensitive goods and goods subject to tariffs under Section 301, Section 201, or Section 232. However, the Administration did not mention the bill’s proposal of expanding CBP’s discretion in determining which goods should be barred from de minimis eligibility or the establishment of a $2 fee per shipment.

The Administration’s plan for executive action adds to the bipartisan calls by members of Congress and domestic trade associations to reform the de minimis exemption. With the alignment between the Administration and the FIGHTING for America Act – at least on barring import-sensitive goods and goods subject to tariffs – it may be that a consensus on what to do about de minimis is near at hand and could manifest in legislation by the end of the year. If you have any questions about how a potential change in the de minimis exemption could affect your company, Kelley Drye’s International Trade team is here to help.

New Actions Announced by the Biden-Harris Administration May Signal Changes to De Minimis Exemption